Blue Cross insurers to help launch nonprofit drug company to lower prices

A group of Blue Cross Blue Shield health insurers is helping create a new nonprofit drug company to make cheaper generic drugs, as high drug prices continue to be a focus in the industry and in Washington. 

Health insurers usually just pay for drugs that are made by drug companies, but now a group of 18 Blue Cross Blue Shield health insurers is helping to create a nonprofit drug company to make certain generic drugs itself, targeting medicines where there is a lack of competition and a need to bring down prices. 

The insurers are providing $55 million to make a new subsidiary of Civica Rx, a nonprofit drugmaker founded in 2018 by a group of hospitals. Civica Rx has focused on making drugs that are administered in hospitals, but the new subsidiary will focus on drugs that people pick up at the pharmacy counter, outside of a hospital.

“The subsidiary is being formed in response to the impact of high drug costs on the health of Americans and the overall affordability of health care,” Civica Rx said in a news release. “Other health plans, employers, retail partners and health care innovators who share the belief that patients and their needs come first are invited to join the initiative.”

Insurers and hospitals joining together to create a drug company is a scrambling of the usual health care industry arrangements. 

“Add ‘insurers become drug manufacturers’ to the list of ways the health care system is regrouping,” tweeted Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh. 

The first drugs will become available in early 2022, the company said.